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Innovation and Collaboration at Merrill Lynch

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Here are a set of questions to consider while preparing your case presentation. These questions are in no particular order and should not be considered an outline of the presentation.

It is not necessary to understand the financial services industry to analyze this case. It may be helpful to understand that there are a number of different financial instruments that can be purchased and sold in financial markets. The basic distinction is between equities or stock in the company and fixed income or bonds. Equities are shares in the company that can be bought and sold in a stock market. Bonds are issued by corporations and governments. They are a way of raising capital (money). The issuer of the bond is loaning the purchaser the money at a fixed interest rate. Bonds can be bought and sold in a market also. The big difference is that the buyer can hold the bond, be paid the interest rate on the bond and cash the bond in when it becomes due. At that point the government or the corporation has to pay off the bond. The case points out that the amount of bonds that the corporation has outstanding are an important part of their debt since they owe the money to the owners of the bonds. When an industry is in trouble then investors would like to know how much debt a company in that industry has. This information would affect whether you want to buy stock in the company which becomes worthless if the company goes bankrupt, or bonds issued by the company which the company has to repay, if possible. The financial instruments available are much more complicated and involve instruments like convertibles (bonds that can be converted to stocks) and derivatives.

Merrill Lynch as a financial management and advisory company advises individuals, institutional investors, such as pension funds, and hedge funds on what financial instruments to invest in as well as acting as an investment bank Information about what companies are worth and likely to be worth in the near future is valuable information to be shared with its investors.

This is a case about Merrill Lynch's attempt to encourage collaboration and teamwork at the company. Assume that you are consultants called in to advise Merrill Lynch on whether and how they should engage in more teamwork.

1. What is there about Merrill Lynch that discourages collaboration on teams? How does the "star" rating make collaboration more difficult?

2. What are the advantages and disadvantages of collaboration at Merrill Lynch?

3. Looking at the guidelines for collaboration in Yukl, chapter 11, what would you recommend be changed at Merrill Lynch to encourage collaboration?

This page last modified on 1/24/07